News

Macy's kicks off cost efficiency, streamlining strategy

January 12, 2017

In a quest to boost cost efficiency and streamline its store portfolio, Macy's will close about 100 locations by August of this year, according to a press release.

"These actions bolster the company's strategy to further invest in omnichannel capabilities, improve customer experience and create shareholder value," states the release, which notes the new strategy will include a "significant restructuring" of the retailer's operations to boost organizational agility and cut expenses.

The strategy and sales of properties will generate $550 million in annual savings starting this year. That savings, stated the release, will let Macy's invest an additional $250 million in its digital business and store-related growth strategies.

"Over the past year, we have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time," Terry J. Lundgren, Macy's chairman and CEO, said in the release. "While we are pleased with the strong performance of our highly developed online business, as well as the progress we have made on selling and visual presentation programs and expense reduction initiatives in 2016, we continue to experience declining traffic in our stores where the majority of our business is still transacted. Given the overall trends challenging us and the broader retail industry, and the time needed to execute new strategies, we expect our 2017 change in comparable sales to be relatively consistent with our November/December sales trend."

Macy's aims to offer positions to displaced associates where possible and estimates 3,900 workers will be impacted. Overall, the reorganization strategy will result in a headcount cut of approximately 6,200 workers, stated the release.

"Our omnichannel strategies continue to evolve based on the changes in our customers' shopping behaviors, including a focus on buy online, pickup in store and mobile-enabled shopping," Lundgren said. "In addition, we have invested in and enlarged our customer data and analytics team, which will help drive our new marketing strategies for 2017. Whether it is improving corporate agility, enhancing our customer engagement strategies, or continuing to capitalize on the potential value of our real estate assets, we remain focused on the actions that will ultimately improve our financial results and provide the greatest return for our shareholders."